The Fable of the Misinformed CMO
Once upon a time there was a colleague of ours who was working on a brand assignment for a big computer company. He was interested in knowing the current drivers for the computer category. Knowing that the 2007 Brand Keys Customer Loyalty Engagement Index had just arrived on our desk, he called to ask if he could get an early peek at the most recent driver configurations.
The “drivers” he was asking about were the values that describe how consumers view a category, how they will compare the brands and their offerings within the category, and—because loyalty and engagement drivers are actually predictive—how consumers will behave in the marketplace, which is consultant speak for “buy your brand vs. the competition.”
All categories have drivers, and real loyalty and engagement metrics identify the order of importance of those category drivers, and do it from the consumers’ perspective. Loyalty-based driver order is not derived importance or stated importance. Do not confuse these two ideas, because they are not the same!
The loyalty-engagement model identifies four drivers for each category. Each driver is made up of a number of category and consumer attributes, benefits, and values (ABVs). There’s a detailed process of how these ABVs end up as components of one driver vs. another, but that‘s not the point of this fable. Call me if you’re curious about that.
If you want consumers to buy you and not your competitor, here are four absolute truths about drivers that describe the reality of the 21st-century marketplace:
1) Appropriately configured, category drivers will reveal what people think and not what they say they think.
2) Drivers differ from category to category. The drivers for computers are vastly different from those in the cola category. All that cross-category stuff that looks so nifty on a quadrant map is generally useless!
3) If you know how consumers really view a category you can configure more-powerful brand strategies, will be able to attain higher levels of brand differentiation, will more easily engage customers, will be able to uncover better-resonating creative approaches, and ultimately will be able sequence your marketing and communication initiatives more effectively and efficiently.
4) If you get them wrong it’s like trying to navigate a ship using just a Magic 8-Ball to set your coordinates.
Okay, back to the fable.
So the generous folks at Brand Keys pulled the computer category drivers—they’d been identified as technological capabilities, design and added features, service and support, and warranty and pricing—and in the best tradition of sharing knowledge, sent them off to their colleague. They thought no more about it until they received an e-mail from him a few days later.
The essence of his note was that he had used the category driver insights in a presentation to his client, a very senior marketer for a very, very well known computer brand, who, it turned out, was willing to bet the brand that price was the number-one driver in the category.
At first we thought, “Do you really want to configure your brand strategy around price?” Then we thought, “Can you spell ‘commodity’?” The larger, more universal question, of course, was “Does the chief marketing officer really know what drives his business?”
In fairness, it isn’t that price isn’t one of the values that consumers take into account when they buy computers, or anything else for that matter. This is commerce we’re talking about, after all. But it turns out that price isn’t the most important driver for the category. Neither is it the second most important driver, nor the third. It turns out that price is only one of the more minor components of the fourth most important driver, warranty and pricing. The CMO was misinformed.
CMO misinformation isn’t new. It could have come from relying on an old Q&A research model: “Would you rather pay $800 or $650 for this computer?” Ask a question, get an answer, add ‘em up, and divide. Voila, you have an answer! Unfortunately, if you do that you end up with what we’ve come to call an excellent answer to a meaningless question. And if you think that price is number one and base your brand marketing mostly on that misinformation, you end up ignoring more than 85% of the values that customers actually use to value the brands themselves.
It would, of course, be inaccurate to suggest in fact or fable that the computer brand CMO was alone in relying on that kind of misinformation. Virtually 99% of CMOs cannot accurately identify the order of importance of drivers for their categories.
Yes, yes, they do know their category’s drivers, or at least have a working sense about rudimentary versions of what drives their category. But they cannot claim to view their categories the same way as consumers. How can they? CMOs spend their days—and for those facing increasing commoditization and decreasing market share, their nights—thinking about the category and the brand. They spend waaay more time thinking about, say, computers, than the consumer. So they come to rely upon their own perceptions of what drives the category and not the consumers’.
So here’s a fifth marketplace truth: You do that at your peril!
Devoting marketing resources to less-important drivers ends up burning a great deal of money very quickly. It identifies false strategic opportunities. It makes differentiation more difficult to attain, decelerates the engagement process, and, in certain instances, it can torpedo your brand.
In today’s marketplace, consumers are always right and CMOs are frequently misinformed. And I wish that were the moral of the story, but there’s more. We are talking about brands and not the Elgin Marbles, so you have to constantly monitor how consumers “see” the categories because the categories constantly morph and consumer values constantly shift. And with those changes we always see the category drivers shifting their order.
In fact, between 2004 to 2006, there was at least some volatility in approximately 75% of the categories we routinely track in our Customer Loyalty and Engagement Index. And in some cases, the very nature or composition of the drivers themselves is changing, which also makes strategic planning more difficult (but that’s for another fable). So you have to put your trust in what the consumer thinks, constantly and accurately update and monitor category values, and learn what really drives your category.
Because the real moral of the story is that even if you are on the right track, you’ll get run over if you just sit there.
Robert Passikoff, Ph.D., is founder/president of New York-based marketing firm Brand Keys and is the author of “Predicting Market Success: New Ways to Measure Customer Loyalty and Engage Consumers With Your Brand.”
Other articles by Robert Passikoff:
"Genius May Have Its Limitations…"
The New Four P’s: Promoting Predictive Promotion Planning
Self-Interest Is the Anesthetic That Dulls Innovation
Seven Brand and Marketing Trends for 2007
Consumer-Generated Content: Let Yourself Go
